The Registered Disability Savings Plan, or RDSP, is a long-term savings plan designed to help Canadians with disabilities and their families save for the future. If you or your child qualify for the Disability Tax Credit (DTC), you should probably consider opening an RDSP. The RDSP is basically designed to provide the equivalent of a pension plan that will begin at age 60.
Depending on your income, you could receive an annual grant of up to $3500 and a bond of $1000 with a $1500 contribution to the plan. your grant and bond entitlements carry forward to future years, so if you were eligible for the DTC in previous years but have not opened an RDSP, you may receive grant and/or bond from those previous years. You can put as much money as you want into the plan in any given year, but the lifetime maximum contribution amount is $200,000. The maximum grant you can receive is $70,000 and the maximum bond is $20,000. In other words, assuming you qualify for the maximum grant and bond, if you contribute $1500 per year to the plan for 20 years, you would have $120,000 in the plan before any investment returns. Investments within an RDSP grow tax-free.
Contributions made to the plan will attract grant until the end of the year in which the beneficiary turns 49, and withdrawals cannot begin until ten years after the government makes its last deposit to the plan.
The RDSP is a fantastic, powerful, and economical way for a family to save money for the retirement needs of a loved-one with a disability. Contact us today to learn more.